GameStop's Roaring Kitty Shakes the Market
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GameStop's Roaring Kitty, the legendary trader behind the GameStop (GME) meme stock frenzy, has made headlines again with his first YouTube livestream in three years. On June 7, Keith Gill, known as Roaring Kitty, revealed his financial situation and future plans, sparking dramatic market reactions.
In 2021, Gill's advocacy for GameStop sent its shares soaring by as much as 1,600% before they came crashing back to earth. He became an internet hero to some and an annoyance for others on Wall Street. The stock received renewed attention when Gill posted the following meme on his X, indicating that it was time to buckle up.
During his highly anticipated livestream, Gill disclosed that he was down $235 million. This revelation came as GameStop shares plummeted from the previous day's close of around $46 to a low of around $26. At the time of writing, GameStop shares are trading around $28.
Gill also shared that he held call options on 12 million GameStop shares. His announcement on June 6, which scheduled the livestream for the following day, caused GameStop shares to jump from $32 to $46.55, with aftermarket trades hitting a high of $61.27. Based on this aftermarket price, Roaring Kitty was projected to become a billionaire, provided the market held those levels during regular trading on June 7.
The livestream caused significant volatility, with GameStop trading halted six times on June 7 due to extreme price swings. GameStop's stock price dropped sharply, finishing at $28.22. Investors exchanged $10 billion worth of GameStop shares, making it one of the most traded stocks on Wall Street that day, surpassed only by Nvidia and Apple.
Gill's massive position in GameStop faces several challenges. Exercising his call options would require $240 million in cash, which he currently lacks. Selling shares to raise this cash would likely depress the stock price further. Additionally, outside financing could attract scrutiny, adding to the pressure on Gill, who has already faced congressional testimony regarding his market influence.
The reaction from institutional players and trading platforms was swift. E*Trade announced it might remove Roaring Kitty from its platform due to concerns over market manipulation. The GameStop company itself issued a letter clarifying that the sharp rise in its stock was not due to its underlying performance.
Despite the turmoil, Gill maintained his confidence in GameStop's CEO, Ryan Cohen. He urged his nearly 600,000 livestream viewers to trust in Cohen's leadership, though he warned that his aggressive investment style might not be suitable for everyone.
"This is what he does. He discusses the fundamentals, he likes the stock, he memes, he drinks, he rambles," commented Reddit user SteveRogers7 after the livestream. "You want him to tell you to go and pump GME? That is not gonna happen, stay disappointed."
GameStop's recent financial report revealed net sales of $881.8 million and a net loss of $32.3 million for the first quarter. While the sales represented a year-over-year decline of 28.7%, the net loss was an improvement. The company reported $1.083 billion in cash, cash equivalents, and marketable securities. GameStop also announced plans to sell up to 75 million shares to raise capital, though it did not specify the timing.
The GME stock was halted a total of 7 times over the last week.
This Week By the Numbers 📈
Quick Facts:
- Big Tech starts the week with Nvidia's (NVDA) 10-for-1 stock split and Apple's (AAPL) Worldwide Developer's Conference on Monday
- A vote on Tesla (TSLA) CEO Elon Musk's $56 billion pay package is expected on Thursday
- The next update on inflation with the release of the May Consumer Price Index (CPI) is expected on Wednesday morning
- On a "core" basis, excluding food and energy prices, inflation is expected to have risen 3.5% year over year, down from the 3.6% increase in April
- Fed expected to keep rates unchanged
- JPMorgan chief US economist Michael Feroli predicts the Fed will project a median of two interest rate cuts this year in its dot plot, down from three in March
- IMF warns on US fiscal burden
- Binance surpasses 200 million users
- Franklin Templeton explores broader crypto fund
- Kraken considers $100 million funding round
- BTC remains just below ATH after $218 million ETF inflows
- Trump calls himself the ‘crypto President’
- Punks dip below 30ETH
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Tatiana Koffman
About the Author: Tatiana Koffman
Hi there and thanks for reading! If you stumble upon my newsletter, you will notice that I write about money, economics, and technology. I hold a JD/MBA and spent my career in Capital Markets working across Mergers & Acquisitions, Derivatives, Venture Capital, and Cryptocurrencies. I write to make financial topics more accessible and create equal opportunity for the next generation of investors. I have personally invested in 20+ companies and funds (👉 my portfolio).